ANATOMY OF TORTURE — Historian Christopher Dietrich on the 100-year-long history of American torture; Jeffrey St. Clair on the implications of giving impunity to the CIA’s torturers; Chris Floyd on how the US has exported torture to its client states around the world. David Macaray on the Paradoxes of Police Unions; Louis Proyect on Slave Rebellions in the Open Seas; Paul Krassner on the Perils of Political Cartooning; Martha Rosenberg on the dangers of Livestock Shot-up with Antibiotics; and Lee Ballinger on Elvis, Race and the Poor South. Plus: Mike Whitney on Greece and the Eurozone and JoAnn Wypijewski on Media Lies that Killed.

Goldman Sachs’ Trader Finds a New Occupy Tactic

by PAM MARTENS

In the last decade, Wall Street has evolved from predator to organized crime with a speed dial to Washington. Instead of Washington reforming Wall Street, it has seduced and corrupted Washington. It didn’t have to come to this.

Since at least 1989, incredibly talented, hardworking men and women have been leaving high paying positions at major Wall Street institutions and alerting the public in meticulously crafted, first-hand narratives released by venerable publishing houses that Wall Street wants to rip off its clients’ faces.

On Wednesday, March 14, Greg Smith – following in the proud lineage of Micheal Lewis, Frank Partnoy and Nomi Prins – simply bypassed the tedious route of galleys and nit-picking editors and went straight to the OpEd page of the New York Times with his resignation letter decrying Goldman Sachs for abusing its clients. “It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets,’ sometimes over internal e-mail,” Smith said. He called the current environment at Goldman “as toxic and destructive as I have ever seen it.”

Each day since then, corporate media pundits have frenetically struggled to characterize the motives of this 33-year old earning $500,000 a year. The defining moment in this debate came in this video where Evan Newmark, Wall Street Journal columnist and a former Managing Director of Goldman Sachs, asks MarketWatch writer Jon Friedman the following question in reference to the 3 million page hits Smith’s OpEd had received on line: “Do you think Greg Smith will have an easy time monetizing his popularity?” I had to play the tape three times to be sure I wasn’t hallucinating.

A young man throws both caution and his career to the wind in a virtual scream for the leadership of this country to wake up to what’s still transpiring on Wall Street and a journalist for the newspaper covering Wall Street can only relate the selfless act to dollar signs. The Wall Street culture of greed is metastasizing into the larger society at a gut churning pace. The assumption by Newmark is that there is no one earning $500,000 who might love his country, its future, the next generation’s future more than his love of money.

Smith’s choice of venue for his resignation letter to Goldman was dramatic but his words were just more concrete evidence of what other Wall Street veterans have been telling the public for the past 23 years – as Congress turned a deaf ear and proceeded to remove barriers to facilitate more face ripping of customers.

In 1989, Michael Lewis wrote about his tenure at investment bank Salomon Brothers in the bestseller Liar’s Poker. According to Lewis, “It was assumed that I might well put a customer or two out of business. That was part of being a geek. There was a quaint expression when a customer went under. He was said to have been ‘blown up.’ ”

Frank Partnoy issued another wake up call to the public and Congress in 1997. In his bestseller, F.I.A.S.C.O. – Blood in the Water on Wall Street, Partnoy gave a damning assessment of Wall Street powerhouse, Morgan Stanley, where Partnoy worked as a derivatives structurer: “…my ingenious bosses became feral multimillionaires: half geek, half wolf. When they weren’t performing complex computer calculations, they were screaming about how they were going to ‘rip someone’s face off’ or ‘blow someone up.’ Outside of work, they honed their killer instincts at private skeet-shooting clubs, on safaris and dove hunts in Africa and South America, and at the most important and appropriately named competitive event at Morgan Stanley: the Fixed Income Annual Sporting Clays Outing, F.I.A.S.C.O. for short. This annual skeet-shooting tournament set the mood for the firm’s barbarous approach to its clients’ increasing derivatives losses. After April 1994, when these losses began to increase, John Mack’s [President of Morgan Stanley] instructions were clear: ‘There’s blood in the water. Let’s go kill someone.’ ” (Wall Street is serially enamored with killer talk, as I previously reported here.)

But Partnoy, now a law professor at the University of San Diego, did not stop with eye-opening books. He took his case repeatedly and directly to those who had the power to stop the financial madness before it took down the country.

On January 24, 2002, Partnoy testified before the U.S. Senate’s Committee on Governmental Affairs as follows: “After 360 customers lost $11.4 billion on derivatives during the decade ending in March 1997, the Commodity Futures Trading Commission began considering whether to regulate OTC derivatives. But its proposals were rejected, and in December 2000 Congress made the deregulated status of derivatives clear when it passed the Commodity Futures Modernization Act. As a result, the OTC derivatives markets have become a ticking time bomb, which Congress thus far has chosen not to defuse…” That bomb went off on September 15, 2008. Congress had six years to act and did nothing.

Again on March 7, 2006, Partnoy testified before the U.S. Senate’s Committee on Banking, Housing and Urban Affairs that the credit rating agencies’ “increasing oligopoly profits are a dangerous sign, a symptom of an infection spreading through the financial markets…The rating agencies are conflicted, not only because issuers pay for ratings – they also provide consulting services and threaten unsolicited ratings. The multi-trillion dollar credit derivatives industry…is opaque, volatile, and downright frightening.” It remains opaque, volatile and downright frightening today.

By March 3, 2010, Partnoy had decided perhaps pictures were worth a thousand words and gave a large screen slide presentation to the media and attendees at a conference on markets. With his past warnings left unattended until financial disaster prevailed, Partnoy still went about urging sane financial reforms that would properly deal with Wall Street’s off balance sheet debt bombs: “If financial reform doesn’t include reforms that would make Citigroups and other major financial institutions’ balance sheets look like reality instead of fiction, then financial reform isn’t going to work.”

Financial reform isn’t working; in fact, the key aspects of reform are still being negotiated with the unprosecuted inmates 20 months after the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by Congress. That so-called reform legislation did not restore the most critical component: the Glass-Steagall Act, which bars commercial banks holding insured deposits from being under the same corporate ownership as their casino cousins – brokerage firms and investment banks.

Partnoy has a new book coming out in June titled Wait: The Art and Science of Delay, dealing with the timing of decision making.

Just seven days before Greg Smith poured his heart out to 3 million on-line readers, AlterNet published an interview with author and cultural critic Morris Berman conducted by Nomi Prins. Prins is a prolific Wall Street writer who worked for Goldman Sachs as a Managing Director from March of 2000 to her resignation in early 2002, capping a 15-year career on Wall Street. (Prins, together with Krisztina Ugrin, has tirelessly tracked the Fed’s trillions in bailout funds to Wall Street and posts them here.)

Berman has written a trilogy of books on the future of America and tells Prins in this interview that America is in irreversible decline; it is a nation of ignorant people and hustlers and “At this point we can no more reverse our downward trajectory than we can turn around an aircraft carrier in a bathtub.” Berman elaborates:

“The dominant thinking on the left, I suppose, is some variety of a ‘false consciousness’ argument, that the elite have pulled the wool over the eyes of the vast majority of the population, and once the latter realizes that they’ve been had, they’ll rebel, they’ll move the country in a populist or democratic socialist direction. The problem I have with this is the evident fact that most Americans want the American Dream, not a different way of life—a Mercedes-Benz, as Janis Joplin once put it. Endless material wealth based on individual striving is the American ideal, and the desire to change that paradigm is practically nonexistent. Even the poor buy into this, which is why John Steinbeck once remarked that they regard themselves as ‘temporarily embarrassed millionaires.’ ”

Now, I respect people who thoroughly research their subject and write three in-depth books with endless facts and documentation. But something was not quite right with the Berman assessment and it nagged me for an entire week until Greg Smith wrote his $2.15 billion resignation letter. (That’s the amount of market capitalization Goldman Sachs lost that day.)

I went to my bookcase and pulled out the books by Lewis, Partnoy and Prins. If hope is the last thing to die, I wanted something to cling to. I decided the very existence of these books disproved Berman’s theory.

These authors had made large salaries and succeeded on Wall Street. They gave it all up to educate the public and, hopefully, spur reforms. They have relentlessly stayed on this course despite endless disappointments delivered by a hapless Congress.

And what about the thousands of Occupy Wall Street protestors around the country who slept on concrete or dirt in fabric tents in 30 degree weather until ejected by force. How about those Occupiers who were beaten, pepper-sprayed, arrested and came right back for more. Their American Dream, like mine, is simply a level playing field, not a Mercedes-Benz. If Lewis, Partnoy and Prins were the first sounds in the rebellion, Occupy Wall Street is a shout; Greg Smith is a scream.

When I left Wall Street, at the height of a wave of scandals uncovering scores of massively destructive deceptions, my choice was based on a very personal sense of right and wrong…So, when people who didn’t know me very well asked me why I left the banking industry after a fifteen-year climb up the corporate ladder, I answered, ‘Goldman Sachs.’

“For it was not until I reached the inner sanctum of this autocratic and hypocritical organization – one too conceited to have its name or logo visible from the sidewalk of its 85 Broad Street headquarters [now relocated to 200 West Street] that I realized I had to get out…The fact that my decision coincided with corporate malfeasance of epic proportions made me realize that it was far more important to use my knowledge to be part of the solution than to continue being part of the problem.”

I decided to reach out to Partnoy and Prins with the following question: “What is the one thing that could happen in America today that would make you optimistic that the country will find its moorings in time to save itself.” They responded as follows:

Frank Partnoy: “One crucial thing is for Americans to rediscover the importance of the rule of law. Oliver Wendell Holmes famously said that the law is a prediction of what a judge will do. For decades, that common law notion helped reinforce a culture of respect and ethics as people in private and public life came to understand that if they did something wrong, a judge would ultimately assess their conduct and punish them for it. Unfortunately, today we live in a country of rules, not law, and judges are largely absent from policy making. These rules differentially affect people based on their race, social and economic status, and — most importantly — whether they work on Wall Street. The wealthy avoid rules; the poor cannot. Until we approach white collar crime as we do street crime, Americans will be justified in their lack of respect for the legal order. And respect for law is the backbone of any society.”

Nomi Prins: “Any potential for a more positive outcome would have to rise from a broad population push that renders the 99% more influential. True reform won’t manifest from the highest echelons of political chambers or corporate boardrooms. Inequality won’t be lessened because the wealthiest individuals decide to spontaneously share. It is up to individuals to pay more attention to their collective, rather than personal surroundings, despite all media messages to the contrary. Indeed, we need to spend more time examining what’s going on, and not zoning out on some sound bite about a Kardashian. We need to band together, as in the Occupy movements, or even in local communities, to demand an alternative system and become a more unified society. Unfortunately, so much of our current framework is stacked against this, starting with the sheer cost of living which demands so much of our energy. It all comes down to embracing the human drive to connect, rather than merely survive.”

Prins has written a novel, Black Tuesday, which reminds us of the parallels between today’s systemic Wall Street corruption and that of 1929. The heroine, Leila, is given a missive by her Aunt. “Sometimes you don’t find your cause, Leila…Your cause finds you. There is a fight buried in all of us.”

Will that fight be unearthed in enough people to make a difference? Time is not our friend.

Pam Martens worked on Wall Street for 21 years. She spent the last decade of her career advocating against Wall Street’s private justice system, which keeps its crimes shielded from public courtrooms. She maintains, along with Russ Martens, an ongoing archive dedicated to this financial era at www.WallStreetOnParade.com. She has no security position, long or short, in any company mentioned in this article. She is a contributor to Hopeless: Barack Obama and the Politics of Illusion, forthcoming from AK Press. She can be reached at pamk741@aol.com